The Ukrainian Oil & Gas Association Presents Challenges Facing the Fuel Market at UBC Conference on Business De-shadowing

On 1 July 2025, Kyiv hosted the conference “De-shadowing of Retail Trade and the Services Sector: New Trends,” organised by the Ukrainian Business Council (UBC) in collaboration with the American Chamber of Commerce (ACC) and the European Business Association (EBA), with analytical support from the Economic Expert Platform.

The event gathered representatives of government, law enforcement agencies, business associations, and expert centres, who discussed the current state of de-shadowing in key economic sectors – notably in excisable goods (alcohol, fuel, tobacco), the jewellery industry, electronics and household appliances, agriculture, as well as the internet services sector. The President of the Ukrainian Oil & Gas Association (UOGA), Mr. Yaroslav Starovoitenko, delivered a comprehensive analysis of the fuel market, outlining the problems, challenges, and the true scale of the shadow segment under wartime conditions.

According to Mr Starovoitenko, due to the war and the occupation of parts of the country, Ukraine’s fuel market volume has shrunk from 12 million tonnes in 2020 to 10.6 million tonnes in 2024. The number of petrol stations declined from 7,700 in December 2021 to 6,000 by December 2024.

“Most of these closures are stations that were destroyed, seized, or genuinely shut down in regions of active hostilities. However, in our view, following the enactment of legislation mandating advance payment of profit tax, a significant segment of petrol stations moved into the shadows, effectively operating illicitly. Without a licence, one becomes invisible to the authorities,” emphasised Mr Starovoitenko, explaining the reduction in officially registered petrol stations.

The UOGA President also cited figures on tax revenues: “In 2024, nearly 200 billion hryvnias were paid in taxes. This includes import taxes (excise duties and VAT) as well as operational taxes. While taxes at import are relatively clear, the payment of operational taxes demands additional scrutiny.”

Yaroslav Starovoitenko

At the same time, Mr Starovoitenko highlighted an imbalance in tax burden: the average tax burden for association members stands at 2.5 hryvnias per litre, while the market average is merely 1.74 hryvnias, indicative of a substantial share of shadow operations.

Speeches by Conference Participants

Yaroslav Zheleznyak, First Deputy Chairman of the Verkhovna Rada Committee on Finance, Tax and Customs Policy and Chair of the Temporary Special Commission on Economic Security, adopted a firm stance against the shadow economy. He categorically dismissed proposals to soften the tax regime for the fuel market, emphasising the need to overhaul key agencies:

“I have high hopes for the new head of the Bureau of Economic Security (BEB) and the reboot of the BEB. Beyond that, I have little faith,” he declared.

He also voiced support for initiatives to increase fines for illegal trade, establish a “library” of tobacco product samples, and create a registry of “drops” (straw persons used in tax evasion schemes).

Yaroslav Zheleznyak

Pavlo Buzdygan, Head of the Detective Division at the National Anti-Corruption Bureau of Ukraine (NABU), underscored the Bureau’s openness to cooperation with businesses in combating corrupt schemes. He noted that customs and taxation are among NABU’s priority areas but stressed that the institution’s mandate focuses on investigating top-level corruption. Mr Buzdygan encouraged businesses to proactively provide information on corruption schemes, guaranteeing the possibility of confidential cooperation. He underlined the importance of a systemic approach to tackling the shadow economy, rather than isolated measures.

Serhii Kuiun, Director of Consulting Group A-95, confirmed positive trends in de-shadowing. According to him, experts expect operational tax payments by filling station networks to increase by 70% over two years. Mr Kuiun emphasised the effectiveness of “soft” pressure methods, particularly advance payments of profit tax and the availability of public data: “We have achieved these results through rather gentle means. By highlighting the issues and illustrating them with charts, we enable law enforcement to focus on anomalous market players.”

Research by the Economic Expert Platform’s specialists estimates budget losses from the shadow turnover of excisable goods (alcohol, fuel, tobacco) in 2024 at 35–39 billion hryvnias, representing a 20% reduction compared to the previous period. Simultaneously, the research points to positive trends, such as rising wages and increased tax payments across nearly all surveyed economic sectors. Nevertheless, despite encouraging progress in de-shadowing, the issue remains pressing, particularly in wartime, when additional budget revenues are vital to fund the Armed Forces of Ukraine.

Conference participants concluded that de-shadowing the economy requires a comprehensive approach, including:

• Overhauling key agencies – the BEB, customs, and tax services;
• Increasing fines for illegal trade to economically significant levels;
• Establishing a registry of drops and introducing criminal liability for organisers of drop schemes;
• Strengthening banks’ control over grey-market transactions;
• Opening all necessary registries for public oversight;
• Incentivising consumers to demand fiscal receipts (e.g., fiscal lotteries).

The next conference on de-shadowing issues is scheduled in three months to assess progress in implementing the agreed decisions.

Background:

The Ukrainian Oil & Gas Association is an industry body representing the interests of Ukraine’s largest oil and gas market players. Its membership includes leading wholesale, retail, production, and refining enterprises from the national, international, private, and state sectors: WOG, OKKO, AMIC Ukraine, SOCAR, KLO, UPG, Orlen, Parallel, Ukrgazvydobuvannya, and Ukrnafta. The Association actively engages with government agencies, consulting firms, the expert community, and the media to develop legislation, introduce European quality standards, and protect the interests of market participants.